Vanguard Sterling Short-Term Money Market Fund

chinadolltj

Hi all, I just saved my SIPP pension into Vanguard Sterling Short-Term Money Market Fund following the interest rate cut from Vanguard on cash saving. I saved on 30th March and saw a drop on NAV today. I understand that this is due to ex dividend date and vaguely understand that I won't lose money because of it. 

I would like to ask if it makes a difference if I buy in early or later in the month, same question that I have for when I sell the fund. I would be grateful If someone could kindly explain how the fund works or direct me to some existing post which explains that.

Meanwhile, with the current bank issues, what are the potential risk of this fund.

Many thanks in advance.

InvesterJones

No, no inherent difference to buying/selling at any particular point in the month. If it's an income fund then the price will account for ex dividend either way so you'll end up with the same.

The risks for the fund are spelled out in the key investor information document so make sure you read that. I think the same document also explains how the fund works.

dunstonh

Meanwhile, with the current bank issues, what are the potential risk of this fund.

No greater or lower than at any other time or for any other type of regulated investment fund and are listed in the KIID

Alistair31

So as not to start a new thread…
I wonder if anyone might be able to tell me what happens if I invest in the Royal London MM fund, which pays out twice-yearly, but I choose to sell before the scheduled date, do I still benefit / earn “interest” for the period held? 

InvesterJones

Alistair31 said:

So as not to start a new thread…
I wonder if anyone might be able to tell me what happens if I invest in the Royal London MM fund, which pays out twice-yearly, but I choose to sell before the scheduled date, do I still benefit / earn “interest” for the period held?

Yes you do - the fund value will increase in the period held if it earns.

chinadolltj

Is my calculation correct here for Vanguard MMF, say I bought £500 on 31 March with NAV 1.0029, if I sell today on NAV 0.9998, I lost 500/1.0029*(1.0029-0.9998) = 1.545, however as distribution rate per unit is 0.0035, hence I earn interest of 0.0035*(500/1.0029) = 1.745 hence overall I still earn 1.745-1.545 = 0.2?

Meaning the earlier you buy in the month, the more you will earn which is fair?